Gold Shoots Higher After Record Quarterly Drop
ICN.com | Jul 01, 2013 06:16AM ET
Gold extended gains early Monday following some end-of-quarter short-covering that boosted gold futures last Friday, while traders were optimistic after U.S. Federal Reserve remarks on the need to maintain the bank`s stimulus measures.
As of 2:33 ET, gold for immediate delivery jumped 1.70 percent or 20.82 points to trade at $ 1,244.78 an ounce after opening at $1,234.11, having earlier hit a high of $1,247.81, and a low of $1,225.37.
The yellow metal declined nearly 23 percent this quarter, the largest quarterly loss on record, as speculation that the end of Fed stimulus would arrive sooner rather than later hit gold futures hard this month. The so-called quantitative easing has been credited for supporting a rally in gold in recent years.
The president of the New York Fed William Dudley, Fed Governor Jerome Powell and Atlanta Fed President Dennis Lockhart sought to calm investors last week by assuring them the Fed won`t start trimming its bond purchases until the economy has strengthened.
While President of San Francisco Fed John Williams said late Friday he had backed off from his earlier view that the Fed should start tapering stimulus this summer, because inflation has been lower than he expected.
Moving to other metals:
- Silver gained 1.89% to trade around $ 19.80
- Platinum rose 0.70% to $ 1,346.75
- Palladium edged 2.10% higher to $ 673.65
Gold rallied last Friday as stocks sagged despite some decent U.S. data points, where a report showed U.S. consumer sentiment improved in late June, ending the month close to a near six-year high set in May.
Favorable news out last week also pointed to resurgent consumer spending in May and the highest level of pending home sales seen since the subprime mortgage meltdown coupled with institutional investors and traders liquidating their gold positions for month-end and quarter-end.
Investors will be waiting for the U.S. nonfarm payrolls data due on Friday to determine the strength of the U.S. economic recovery. Investors have been taking their cues from U.S. jobs data as they attempt to gauge when the Federal Reserve will begin to slow the pace of its bond buying program this year.
The USDIX dollar index is currently trading around 83.37 after opening at 83.44, having so far hit a high of 83.47and a low of 83.32.
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